Sponsorship and the Organisation of Mega Events

Abstract

The growth in the holding of mega events is an important contemporary phenomenon. Such events involve the participation of thousands of people, the viewership of many more through local and global television broadcasts and the direct involvement of three categories of individuals and organisations, the holders of these events, their sponsors and their organisers.

This dissertation investigates the various reasons for sponsors and organisers to engage in event associated activity, the benefits they can obtain from their actions and the possible disadvantages and dangers of engaging in such actions.

The dissertation is conducted with the use of secondary sources of information, the application of library research techniques and the adoption of an interpretivist and qualitative approach to the issue.

The findings of the research reveal that whilst the sponsoring and organising of events can result in substantial benefits to both these parties, they need to be aware of the various dangers and risks that can come about from mistakes in their approach and inadequacies in their abilities with regard to the sponsoring and management of events.

Chapter 1: Introduction

1.1. Overview

Event Management is not just one of the most visible of contemporary business activities in the advanced as well as emerging nations; it also represents a swiftly growing and highly remunerative business sector (Armstrong, 2001, p 17). Humans have been organising events of different types and sizes since historic times. Huge sporting events were organised by the Romans and the Greeks for the enjoyment of their citizens. People have been organising small and large events like birthdays and weddings for ages. Most ancient societies have histories of music, drama and theatre, which were strengthened, reinforced and conveyed through generations by the holding of village, town and city events of different hues (Armstrong, 2001, p 17).

The growth of sporting and cultural activity across the world over the last two centuries has tremendously increased the type, the variety, and the size of events in the modern era. Sporting events like the Soccer World Cup and the Olympics have become mammoth global events that are furiously pursued by nations for the furtherance of their political, economic, social, and cultural objectives. Whilst the Olympics and the World Cup are global events, even a small village football competition qualifies to be termed as an event and has significant local implications (Armstrong, 2001, p 17).

The rapid growth of incomes and populations across the world, along with tremendous changes in social and cultural attitudes, and advances in areas of sports, entertainment, tourism, travel and communication, have transformed the holding of events into a huge global activity with significant political, economic, social and cultural implications (Allen, 2000, p 31). Such growth in events has resulted in their use by various individuals and organisations for meeting their own objectives (Allen, 2000, p 31).

Events, in the first place, have opened up huge business and commercial opportunities for their organisers (Armstrong, 2001, p 21). Event management has become a recognised mainstream business activity that is associated with project management and is taught in many universities. It is now a business sector that is not only growing rapidly, but is also providing commercial and employment opportunities to thousands of organisations and individuals (Armstrong, 2001, p 21).

The growth in variety and size of events, as well as in their participation by thousands of people, has resulted in the area becoming extremely attractive to organisations as an avenue for marketing and promoting their organisations, their products and their services (Allen, 2000, p 37). Business firms now routinely sponsor various types of events to achieve their organisational, marketing and sales objectives. Such events give them platforms of different types to reach their customers, their broader consumers, their communities and society at large (Allen, 2000, p 37).

Mega events like national or international cultural and sporting events attract thousands of participants and millions of viewers. Such events are extremely complex to organise and attract numerous sponsors who often expend significant sums of money to participate in them.

1.2. Definition of Problem

The growth of the event management sector has resulted in the generation of strong commercial opportunities to event organisers and of an attractive channel for marketing communication for business firms.

Business firms by and large use events as marketing channels by assuming the role of event sponsors (Fahy, et al, 2004, p 1013). Whilst sponsoring entails financial expenses to meet some or all of the costs of sponsored events, it gives sponsors rights to advertise their products through the various channels associated with specific events. Mega events furthermore provide sponsors with visibility to millions of TV viewers in addition to thousands of spectators (Fahy, et al, 2004, p 1013).

Organisers on the other hand manage events of different types that include charity shows, balls and dances, sporting events, weddings and birthdays, elaborate conferences and country fairs (Getz, 1997, p 67). Large events require extensive planning and coordination skills and provide their organisers with greater commercial and income opportunities, as well as chances for improving their event management skills (Getz, 1997, p 67).

The contemporary fascination with events has however also resulted in indiscriminate event management activities by organisers and equally rampant sponsorship activity by business firms (Westerbeek, et al, 2005, p 55). Such unbridled expansion in organisational activity, as well as in sponsorship actions, often leads to adverse consequences for the stakeholders of individual events. Events, especially if they are large in scope and specialised in nature, involve numerous complex activities and careful planning and coordination. Their quality is bound to suffer in various ways if their management is short of perfect (Westerbeek, et al, 2005, p 55). The indiscriminate use of sponsorships by organisations, desperate to convey their marketing messages in an increasingly cluttered world, often results in the choice of suboptimal and inappropriate events for communication of marketing messages (Westerbeek, et al, 2005, p 55).

Such problems essentially arise because of confusion in the minds of marketing organisations and organisers about the purpose of events and the benefits that can come about from events, both to sponsors and to organisers. These problems again increase with the size of events. The problem for this study can thus be defined in terms of the following question:

What is the role of sponsorship and what are the specific benefits that can accrue to organisers and sponsors of mega events?

The resolution of such a question will help organisers and sponsors in knowing more of the benefits and disadvantages of organising and sponsoring specific events and help them in taking appropriate decisions.

1.3. Purpose

The purpose of this dissertation is to specifically investigate the benefits that can arise to the organisers and sponsors of events. The objectives of the dissertation are elaborated as under:

• To ascertain the role of sponsorship in the organisation of mega events
• To ascertain the advantages and disadvantages of sponsoring such events
• To ascertain the advantages and disadvantages of organising such events

The analysis and results of the dissertation will be useful for organisers of events, business corporations that make use of events, or intend to do so, to convey their messages, and to students of event management. The study takes up a fundamentally important aspect of event management and its results should not only increase the knowledge of readers, but also sharpen and improve the actions of organisers and sponsors.

1.4. Scope of Study and Research Methods

The dissertation takes up the study of various aspects of event management from the perspectives of organisers and sponsors. It makes use of secondary literature available in the public domain in the form of books, journals, magazines, case studies and organisational websites (Bryman & Bell, 2003, p 24).

The research examines both quantitative and qualitative information in order to arrive at appropriate findings and analysis. The research is conducted with the help of library search methods that involve both physical and online sources (Bryman & Bell, 2003, p 24). The research method adopted for library search is deductive in nature (May 2001, p 14) and starting with broad information about events and event management progressively focuses on the issue of organisers and sponsors, their roles, and the advantages and disadvantages that can arise from their participation in mega events.

With the subject being interpretative in nature, the analytical approach is essentially interpretivist in nature and qualitative in approach.

Chapter 2: Review and Analysis

2.1. Literature Review

This literature review investigates events from two specific but important perspectives, those of their organisers and their sponsors. The review is furthermore restricted in scope to large events that necessarily have substantial outlays of finance and effort, as well as large participation by members of the public.

2.1.1. Events and their Management

Events can be of various types. These can include celebrations, education, promotions, commemorations and cultural events. The table provided below details some types of events and the reasons for which they are held.

Types of Events

Events

Details

Celebrations

Weddings, Reunions, Fairs, Parades, Birthdays, Anniversaries, First Communions, Sweet 16s, Bar and Bat Mitzvahs

Education

Meetings, Conferences, Graduations and Conventions

Promotions

Fashion Shows, Conventions, Product Launches and Political Rallies

Commemorations

Memorials and Civic Events

Sport and Culture

Olympics, World Cup, Film Festivals, Award Ceremonies, Opening Releases of big budget movies.

(Source: Allen, 2000, p 4)

The table indicates the range and scope of events. Whilst events like birthdays and weddings may appear to be inappropriate in a discussion on mega events, many of the contemporary rich often hold extravagant events to celebrate such occasions. Such events by and large, especially if they major in nature, have three main groups of stakeholders, namely (a) the individuals or organisations who are holding the event, (b) the event planners and organisers and (c) the event sponsors (Allen, 2000, p 8).

The holders of an event are very obviously its main drivers. The Soccer World Cup is for example held by the Federation of International Foot Ball Federations (FIFA), whilst the Cricket World Cup is held by the International Cricketing Council (ICC). The Indian Premier League (IPL) tournament, the largest T20 tournament in the world, is held by the Board of Cricketing Control of India (BCCI). Conferences and award ceremonies are also held by specific organisations or even individuals.

Whilst these organisations are undoubtedly the drivers of these events, they rarely have the resources to organise such events with the required efficiency, quality, and even class (Sargeant & Jay, 2004, p 71). The planning and organising of these events is thus entrusted to specific specialised individuals or organisations that have particular skills and abilities in the organisation and management of such events. With life becoming increasingly busy and complex, both small and big events are handled by such event managers or event management companies (Sargeant & Jay, 2004, p 71). These organisations assume the complete responsibility of hosting events on behalf of the official holders of such events. They have numerous and complex responsibilities, which are taken up for discussion and elaboration in subsequent sections of this study (Sargeant & Jay, 2004, p 71).

The other main stakeholders in large events are the sponsors. Whilst sponsors are not involved either in the holding or in the organisation of events, they play a critical role in such events and are often responsible, not just for the successful conduct of events but for their very existence (Meenaghan, 2001, p 96). With large and mega events involving a number of features and substantial expenses, sponsors provide essential funds for the holding of such events. They are, in return for such funds, provided with different types of opportunities to participate in the events and to convey their messages to participants (Meenaghan, 2001, p 96). With events becoming an increasingly important and glamorous feature of modern day life, they provide different types of opportunities to sponsors for conveying their messages to participants and viewers (Meenaghan, 2001, p 96).

The successful holding of an event essentially satisfies the basic objectives of the holders, the business and commercial objectives of organisers, the advertising and marketing objectives of sponsors, and the various objectives of the participants. Both organisers and sponsors play very important roles in the conduct and success of events.

2.2. Discussion and Analysis

2.2.1. Role of Sponsors of Events

Sponsorship essentially represents the payment of money or the giving of benefits in kind to individuals or organisations to further their specific activities in areas that include but are not restricted to sports, entertainment, arts and charitable causes (Alexandris, et al, 2007, p 130). An organisation may for example sponsor a budding sports people or an artist by paying for their various expenses in order to facilitate their careers (Alexandris, et al, 2007, p 130). Teams like Ferrari, Manchester United and the English Cricket team also have sponsors who enable them to participate in various tournaments by paying for part or all of their operational expenses (Barros, et al, 2007, p 161). The sponsorship of events is a specialised form of sponsorship that focuses on the payment of the expenses required for conducting specific events (Barros, et al, 2007, p 161). The conduct of events, apart from requiring complex organisational efforts also calls for financial expenses (Cornwell & Maignan, 1998, p 6). Whilst the financial expenses of holding and conducting events essentially depends upon the size of specific events, large or mega events, the subject of this discussion usually entail very substantial outlays of funds (Cornwell & Maignan, 1998, p 6). Whilst many events do have certain amount of revenue flows from sales of tickets to audiences such revenues are seldom enough to cover the cost of events (Cornwell & Maignan, 1998, p 6). The holders and organisers of such events thus look towards sponsors for covering the costs of holding these events as well as for earning extra revenues or profits (Burbank, et al, 2001, p 107). Charitable events for instance are conducted solely for the purpose of generating funds for specific charitable causes (Burbank, et al, 2001, p 107). Organisers of such events thus clearly look to sponsors for the raising of sufficient cash surpluses that make the holding of the event worthwhile. Even otherwise most holders of events look towards earning of substantial surpluses in addition to covering of organisational expenses (Alexandris, et al, 2007, p 130).

The sponsors of events thus play a critical role by providing the funds for the holding of such events (Fahy, et al, 2004, p 1017). It can safely thus be said that the overwhelming majority of contemporary mega events would not be held at all without the presence of sponsors (Fahy, et al, 2004, p 1017). Sponsors drive events and the event management industry (Flynn, 1993, p 51). Even state events are usually held with the significant amount of sponsorship backing (Flynn, 1993, p 51). It is important to understand that sponsorship spends are growing steadily and were positive even in 2009, despite the increase in 2009 being lesser that 2008 (Kolah, 2003, p 61). Studies reveal that global expenditure on sponsorship has increased by more than 10 times and is estimated to be more than USD 46 billion per year. Experts expect sponsorship to expand further in the coming years (Kolah, 2003, p 61).

“According to specialist consultancy IEG, part of WPP Group, global spending through this channel climbed 5.2% in 2010, reaching $46.3bn (€35.7bn; £29.7bn). This constituted an impressive recovery after the sector posted declining revenues for the first time in 2009, as the recession impacted marketing budgets. It also beat the projected increase of 4.5% which was outlined by IEG in a similar study published last year. Such a positive trend is likely to extend into 2011 following another 5.2% expansion to $48.7bn, as demand strengthens across the globe”. (Warc, 2011, p 1)

2.2.2. Advantages of Sponsorship

Sponsorship represents a financial or in-kind support activity that is used by organisations to reach specific business goals. The IEGs Complete Guide to Sponsorship advises managers not to confuse it with advertising (Alexandris, et al, 2007, p 130).

Sponsorship helps companies to promote their products, services, organisations and brands. It is thus a marketing tool that is becoming progressively important in a cluttered market place (Cornwell & Maignan, 1998, p 6). Modern day organisations, most of who are engaged in activities in intensely competitive environments, are constantly searching for effective ways to communicate with their customers and other stakeholders (Cornwell & Maignan, 1998, p 6). Marketing communication has become a sophisticated function and provides organisations with ways and means to use different channels like advertising, public relations, promotions, sponsorships and the internet to communicate with their target markets and stakeholders (Burbank, et al, 2001, p 107). Efficient organisations use a number of these channels in tandem with each other to reinforce their message and communicate effectively with their clients. Sponsorship forms one important channel for communication with outsiders (Burbank, et al, 2001, p 107).

Whilst advertising is a quantitative medium, sponsorship, the IEG feels should be considered to be a qualitative medium that promotes sponsoring organisations along with the event that is being sponsored and its holders (Flynn, 1993, p 51). Numerous contemporary events are conducted with the use of sponsorship in order to offer better and more exciting programmes, meet increasing costs and make profits. Sponsorship allows organisations to access specific niche markets without waste of money and effort (Flynn, 1993, p 51). It also acts as a powerful compliment for other marketing programmes and can dramatically influence customer relationships. Sponsorship offers organisations numerous benefits like (a) enhancement of image, (b) shaping of consumer attitudes, (c) driving sales, (d) creating positive publicity, (e) increasing organisational visibility, (f) helping CSR initiatives and enhancing relationships with consumers and other stakeholders (Kolah, 2003, p 61). Business corporations constantly look for ways and means to improve their perceptions by their target audiences. The sponsoring of events that appeal to members of specifically targeted marketing segments can help in positively shaping buying attitudes and in generating positive reactions (Kolah, 2003, p 61). Sponsorship also helps companies to drive sales by allowing sponsors to place their product attributes to specific target markets. All sponsors furthermore seek to widen their exposure in different types of media (Kolah, 2003, p 61). The positive publicity that is obtained through sponsorship helps in the creation of greater visibility for products and services. With various types of media covering large events, it is very likely for the sponsors to be included in media coverage, which otherwise could prove to be extremely expensive and even unaffordable (Fahy, et al, 2004, p 1018).

Sponsoring of mega events, especially if such sponsorship is exclusive, provides sponsors with significant ways to differentiate their organisation from others (Barros, et al, 2007, p 161). Sponsors of the 2011 World Cup for example have been given an ambush marketing right, which specifically prohibits players from displaying the logos of any of their sponsors who are not official sponsors of the World Cup. With television coverage of the World Cup reaching about a billion people, the official sponsors of the event get substantial opportunities to differentiate their offerings from their competitors and in building substantial mind space (Alexandris, et al, 2007, p 130). Sponsorship of events that is associated with prestige, status, class or specific charitable causes help organisations to associate their images with such positive features (Barros, et al, 2007, p 161). They also allow smaller companies to share the stage with bigger organisations and get a ripple benefit from associating with larger brands (Barros, et al, 2007, p 161).

The sponsorship of community or charitable causes also helps companies to achieve their CSR objectives (Fahy, et al, 2004, p 1018). Many companies, especially if they are smaller in size rarely have the time or capacity to engage in constructive social or community work. Sponsorship of specific charitable causes through events allows such organisations and easy way to contribute to society and meet their commitments (Fahy, et al, 2004, p 1018). Such sponsorship also allows the managers and senior members of sponsoring companies to interact extensively with event holders and officials of other well established large and small companies (Fahy, et al, 2004, p 1018). Such opportunities help decision makers to network with influential people, spot opportunities and even build partnerships (Fahy, et al, 2004, p 1018).

Sponsors convey their messages at events through a range of channels and try to choose the best suitable option to them to connect with their customers. The table provided below gives 50 alternative ways in which sponsors can gain benefits from events.

Communication Avenues for Sponsorship of Events

S. No

Benefits

S. No

Benefits

1

General naming rights

30

Loyalty benefits from access to event or specific areas for target groups

2

Naming rights to specific sections, areas or groups

31

Convenient access to tickets before sales to public

3

Naming rights for specific time frames, such as specific hours at exhibition, trade show, or sports competitions, or for full days, weekends or complete weeks

32

Blocks of tickets that can be given to customers for sporting events

4

Naming rights for awards or trophies

33

Access to database generated from events for direct mailing

5

Naming rights for one or many events

34

Opportunities to give inserts in event associated mail to the public

6

Naming rights for associated or minor events

35

Opportunities for use of database for drawing of prizes or tickets

7

Major sponsorships

36

Participation in event by stakeholders like employees, suppliers and shareholders

8

Supporting sponsorships

37

Access to merchandise or privileged discounts

9

Status of official product

38

Chances for staff to meet with artists and talent

10

Status of preferred supplier

39

The development of an event only for staff members

11

Exclusivity among sponsors at specific levels

40

Volunteering opportunities for staff

12

Use of logos, trademarks and images

41

Opportunities to establish staff recruitment displays and counters

13

Merchandising facilities

42

Distribution of information on staff recruitment

14

Product endorsement opportunities

43

Insertion in media releases and other media instruments

15

Inputs and advice on choice of location, timing and route

44

Communication programme for the market of sponsors

16

Inputs on choice of venue for different events, launch, main or supporting

45

Entitlements for tickets, signage and sampling at associated events

17

On-site product sampling opportunities

46

Specially designed new event to suit sponsor

18

Display and demonstration opportunities

47

Availability of point-of-sale materials for distribution by sponsors

19

Perimeter signage for telecast or non telecast view

48

Opportunity to sponsor to provide talent

20

Exclusive and non-exclusive signage

49

Provision of evidence for discounts for admission, merchandise and others

21

Signage on buildings, structures and vehicles

50

Opportunity to give prizes for promotions and media

22

51

Coupons or advertising on tickets

23

Introductions to celebrities

52

Coupon redemption opportunities

24

Bespoke hospitality event

53

Inclusion in advertising and promotion

25

Internet-related benefits

54

Promotion of media advertising

26

Provision of ‘web events’

55

Advertising in event programme

27

Banners and ads

56

Opportunities to provide equipment, services and staff

28

Promotions and contests on event websites

57

Rights to inputs into organization of main events associated with sponsors

29

Naming rights to event websites

58

Involvement of sponsor’s charity in event activity

(Source: Harrison, 2011, p 1-2)

2.2.3. Pitfalls of Sponsoring

Sponsoring of mega events is an increasingly preferred route for organisations to connect and communicate with their customers and stakeholders (San, et al, 2005, p 4). The activity however requires substantial financial outlays, especially for mega events that attract strong physical and television audiences (San, et al, 2005, p 4). The holders and organisers of such events often peg sponsorship rates at high levels because of the benefits that sponsors are likely to get from extensive media coverage as well as onsite benefits (Meenaghan, 2001, p 103). Many corporations, especially those with strong and aggressive marketing strategies also constantly look for suitable event sponsorship opportunities, thus increasing the cost of sponsoring such mega events (Meenaghan, 2001, p 103).

It is thus very easy for organisations to make mistakes in their sponsoring strategies, the choice of events and the use of communication methods available from such sponsoring actions (Mack, 1999, p 25). It is in the first place important for businesses to coordinate their sponsorship strategies and integrate such strategies with their overall marketing communication. Sponsoring companies must therefore take account of different variables like product, product pricing, target customer segmentation and communication message in the making of sponsorship decisions (Mack, 1999, p 25). The absence of such coordination and integration can lead to the delivery of sponsorship messages to inappropriate customer segments and thus not only lead to waste of money and effort but also possibly negative consequences (Stotlar, 2005, p 42). It would be for example inappropriate for marketers of products for children to sponsor events like operas that are attended mostly be adults. It would conversely be equally inappropriate for a liquor company to host a children’s film festival (Roche, 2000, p 37). Whilst the holders and organisers of events are often bothered with the amount of sponsorship money rather than the nature of the sponsor, it is important for organisations to ensure careful choosing of sponsorship events (Roche, 2000, p 37). Wrong choices in such decisions can lead to total waste of sponsorship money because the intended message is unlikely to reach target segments. Such wrong decisions can sometimes also result in unfavourable consequences (Roche, 2000, p 37). An organisation selling cigarettes may for example be persuaded to sponsor a national competition for debates by upper school students (Kolah, 2003, p 76). Whilst such an event is likely to be attended by many people, the target market is absolutely inappropriate and the sponsorship itself could have negative publicity consequences through criticism by activists or anti-smoking groups (Kolah, 2003, p 76).

Sponsors must also choose the mode of communication carefully in order to maximise communication benefits (Garrison, 1990, p 57). The table provided above indicates a number of avenues that sponsors can use to convey their messages. Individual sponsors should carefully assess the impact and cost of these different avenues and thereafter take the best possible decision. It is also important for sponsors to follow up event sponsorship with appropriate media coverage and integration with other communication channels in order to obtain complete benefits (Garrison, 1990, p 57).

2.2.4. Advantages and Disadvantages of Organisers

The events management industry has grown substantially in size and scope over the last two decades (Westerbeek, et al, 2005, p 77). Whilst major events in the 1980s were confined to sporting events, the performance of rock bands and some major international conferences, the industry now encompasses events for an extensive range of personal and organisational occasions and is held in remote areas of the world (Westerbeek, et al, 2005, p 77). The recent short lived marriage of Hollywood star and super model Elizabeth Hurley was held at a remote castle in Rajasthan, a western desert state of India (Sharma, 2007, p 1-2). Celebrities flew in from all parts of the world and the people who were getting married planned it as an elaborately orchestrated event, the covering rights of which were sold at astronomical prices to mainstream social magazines (Sharma, 2007, p 1-2).

The tremendous increase in the occurrence of events has resulted in the development of an important event management discipline that aims to service the global five hundred billion industries (Sargeant & Jay, 2004, p 92). Event management organisations come in all shapes and sizes that range from one man companies that operate from residences to large corporations that handle events on a global basis. Event managers and organisers are hired by various individual public and corporate entities as well as charities and non profit organisations (Sargeant & Jay, 2004, p 92). All these entities make use of special events to further their specific objectives that among other things includes accessing their target markets and increasing their community viability. The sponsoring of special events is becoming increasingly important with competition forcing marketing corporations to constantly look for new ways to convey their messages to consumers (Sargeant & Jay, 2004, p 92). Non profit organisations and charities on the other hand host numerous types of fund raisers in order to increase their public support and raise funds for their operations. Many companies also host conventions, trade shows and meetings, many of which are large in size and qualify to be te